Airports of Thailand

Airports of Thailand Plc (AOT)

- Airport expansion to be completed earlier than expected
- Swapped most of its yen debt exposure to baht in mid-May
- PSC hike request now with the Ministry of Transport
- Maintain BUY with DCF-based PT of Bt190

Maintain BUY. Yesterday’s meeting was the first presented by AOT’s new chairman,
Khun Sita Divari. The information provided led us to continue our BUY on the counter
with end-2013 DCF-PT of Bt190. We still like AOT for: 1) continued solid traffic, showing
double-digit growth since FY2010 (with a burp in FY2012 from the floods) and 2) as a
major beneficiary of the planned rapid fleet expansion by airlines in Thailand.
Expansion plan. To handle the steady climb in passenger numbers, AOT is working to
complete its airport expansions earlier than generally expected.
- The Bt62bn expansion of Suvarnabhumi (phase 2), raising capacity by +15mn to
+60mn passengers/year, is on track. It is currently in the process of design, which
will take ~10 months, after which 3-4 months will be spent to sign the contractors.
It targets completion in 2017. Of the total project funding of Bt62bn, Bt45bn is
expected to be financed by internal cash, with the rest (shortfall in 2016-17) to be
supplied by other sources – perhaps an infrastructure fund or bank loans.
- New news: Renovations of Terminal 2 at Don Muang, raising capacity by +16mn to
32mn passengers/year at a cost of Bt3bn, will be completed and the terminal
reopened in mid-2014.
- A portion of the Bt5.8bn expansion of Phuket airport (phase 2) that will, when
completed, double capacity to 12.5mn from 6mn passengers/year, will be opened in
late 2013, with the expansion entirely completed in 2015. Initially it was going to
open the entire expansion in 2015; the partial opening this year is new. AOT also
announced that it plans to build a terminal at Phuket airport that will add +4-5mn
passengers/year to capacity at a cost of only Bt100mn; this will be completed in the
next four months. This terminal will be switched from commercial use to be used
for private jets after the completion of the expansion of Phuket airport (phase 2).
Swapped most of its yen debt exposure to baht in mid-May. AOT swapped most
of its remaining unhedged yen-denominated loan (Bt9bn at end-2QFY13), to baht in
mid-May 2013. Calculating using the appreciation of the baht against the yen through
mid-May 2013 and its debt reduction from unrealized FX gains of Bt2.6bn in 1HFY13, we
roughly estimate additional debt reduction of ~Bt300mn at end-3QFY13. AOT’s
earnings will be less affected by foreign currency fluctuations.
PSC hike. Claiming cost rises, AOT has submitted a request to raise PSC (passenger
service charge) by Bt50 to Bt150/person for domestic passengers and Bt100 to
Bt800/person for international passengers. This is now being considered by the Ministry
of Transport.